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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (37500)	6/5/2001 4:15:51 PM
From: adairm	Read Replies (1) \| Respond to of 65232

Dealie: Just for grins, I started papertrading a $400,000 portfolio. I divided it into four stocks, and bought a hypothetical $100,000 of each, and sold June calls on each. The stocks were CSCO, DELL, QCOM, and TXN. I "sold" June next strike up calls. (At the bid, just to be realistic.) The premiums ranged from 4.58% down to 2.59%, well over my goal of 2%. The premiums, before commisions, would yield $14,660, or an average of 3.66%. My goal is 2% or $8,000. So, I'll return $6,650 and add it to my capital for next month. As I type, I would stand to be called out on all but the QCOM. My capital gain would be $8460. Which I would add to capital. So, to recap, I'd start with $400K in capital, end with $415K in capital and have taken $8000 out as 'income'. (All these figures do not include commission and taxes.) Next month, do it again. The risk, of course is a bad bear market. I'd have a lot of capital exposed to the whim of the market. One hedge I'd thought of is to buy cheap puts to protect the downside. Another strategy would be to only invest 1/2 my capital. Keep 1/2 in Money Market funds. Split the 'Capital Gains' and excess Premiums into the Money Market and CC fund. That way, if the CC portfolio took a dive, I'd have funds available to restore it and continue the strategy. Thoughts? Adairm